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• We refer to our earlier announcement on 2 March 2005 (Ref No: TM-050302-6E4F2) regarding the above matter.
  
  Telekom Malaysia Berhad (“TM” or “the Company”) is pleased to announce that the Company has concluded an understanding with a non-related third party,(the name of which would be disclosed upon execution of the Sales and Purchase Agreement) to dispose the twenty-five (25) storey office building known as Wisma TM, Jalan Pantai Baharu, Kuala Lumpur for a purchase consideration of RM70 million. The estimated net floor area of the office tower is 223,211 sf (excluding usable area at podium estimated at 29,495 sf) and 241 parking bays.
  
  Meanwhile, TM has also entered into a Sales and Purchase Agreement with Cygal Development Sdn. Bhd. (“Cygal”) and Ital-Pacific Development Sdn. Bhd (“Ital”) on 30 December 2005 for the purchase of a thirty-three (33) storey office tower known as Tower 2, Plaza Cygal, bearing address of No. 1, Lengkok Pantai Baharu, Kuala Lumpur, together with 296 car park bays (“Tower 2”), at a purchase consideration of RM92.3 Million (“SPA2”). The estimated total net floor area of Tower 2 is 280,643 sf.
  
  Prior to the above, as announced on 2 March 2005, TM has on 4 February 2005, entered into a Sales and Purchase Agreement with Cygal and Ital for the purchase of a twenty-storey (20) office tower known as Tower 1, Plaza Cygal together with 200 car park bays (“Tower 1”), at a purchase consideration of RM65.8 Million (“SPA1”). The estimated net usable total area of Tower 1 is 188,123 sf.
  

• 2.1 Cygal
  • • Cygal is a private limited company incorporated in Malaysia on 15 June 1995 under the name of High Oscar Sdn Bhd. It assumed its present name of Cygal on 6 September 1995. The principal activity of Cygal is to carry on the trade and business of property developer, builder and contractor.
      
      The authorised share capital of Cygal is RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each all of which have been issued and fully paid-up.
      
    • Ital is a private limited company incorporated in Malaysia on 22 January 1992 under the name of Pacific Three (M) Sdn Bhd. It assumed its present name on 11 April 1992. Ital’s principal activity is property development.
      
      The authorised share capital of Ital is RM500,000 comprising 500,000 ordinary shares of RM1.00 each all of which have been issued and paid-up.
      
  2.2 Ital

• Pursuant to the SPA1 and SPA2, Cygal agreed to sell and TM agreed to purchase Towers 1 and 2 at RM65.8 Million and RM92.3 Million respectively, subject to the terms and conditions stipulated therein.

• Whilst all the conditions precedents of SPA1 have been fully fulfilled, completion of SPA2 is subject to and dependent upon the following approvals to be obtained no later than three (3) months from the date of the SPA2, subject always to any further extension that may be mutually agreed upon by the parties:(i) the approval of the shareholders of Cygal and Ital;
  
  (ii) the approval of the board of directors of TM, which has been duly obtained on 26 April 2005;
  
  (iii) the submission to and approval by the Foreign Investment Committee (“FIC”) and other relevant statutory authorities in respect of the acquisition of the property;
  
  (iv) the approval of Pengurusan Danaharta Nasional Berhad (“Danaharta”) of the SPA, the receipt by TM of a redemption, undertaking and disclaimer letter from Danaharta and the acceptance by TM of conditions (if any) imposed by Danaharta for the granting of such approval;
  
  (v) the approval of all other parties with interest in the land;
  
  (vi) the submission to the Pejabat Tanah dan Galian, Wilayah Persekutuan and at Cygal’s own cost and expense of the application to extend the leasehold tenure of the Land to 99 years; and
  
  (vii) receipt by TM of documentary evidence to the effect that the appropriate development order for the development of Towers 1, 2 and the 26-storey hotel tower with 4-level podium known as Tower 3 is renewed and remain valid and subsisting.

• TM will initially pay the ‘as-is’ value of Tower 2 amounting to RM7 million upon signing of the SPA 2, RM35.5 million to Danaharta upon the fulfillment of the Conditions Precedent and the balance is upon the completion of the building (which is targeted 12 months from the date of SPA 2).
  

• The purchase consideration on the Proposed Acquisition of Towers 1 and 2 of Plaza Cygal were arrived at on a willing buyer-willing seller basis and shall be financed by internally generated funds.
  
  The proceeds from the disposal of Wisma TM will be used to partly pay for Tower 2.
  

• In line with TM’s strategic direction to rationalize and streamline all its business activities, both Towers 1 and 2, which are located adjacent to TM’s Headquarters, Menara TM are to be occupied mainly by TM Group.
  
  Tower 1 is currently fully occupied by TM Group’s centralized Customer Relationship Management (CRM)/Call Centre operations and the newly aligned TM Wholesale Division.
  
  Tower 2 would accommodate various business units, currently renting from third parties as well as backroom operational units to be relocated from Menara TM and Wisma TM. This measure would not only reduce rental expense of the Group, it would also vacate prime lettable space at Menara TM to cater for the strong demand from international companies as well as consolidating operational business units closer to Menara TM. Menara TM is fully occupied with a ratio of 45% (external tenants) and 55% (TM Group of Companies).
  
  TM has also initiated efforts to ‘securitise’ its non-core real properties and this will include future properties to be acquired.
  

• The Proposed Acquisition of Towers 1 and 2 of Plaza Cygal is not expected to have any material adverse impact on the earnings and Net Asset of TM for the year ending 31 December 2005.
  

• 
  In so far as the Directors of TM are aware, none of the Directors nor the major shareholders of TM and/or persons connected to them have any interest, whether direct or indirect, in the SPA.